Proposed tech tax to fund local news passes state Senate

A bill to tax Google, Facebook and Amazon to fund the local news outlets has been approved by the state Senate in a surprise vote. It now goes on to the Assembly.

The 7.25% tax on digital advertising will raise an estimated $500 million a year for local news organizations, whose work has been expropriated by those tech companies.

The tax’s sponsor, state Sen. Steve Glazer, D-Orinda, said only a month ago that he doubted the bill would pass. So it came as a surprise that the bill came up for a vote on Thursday and passed 27-7, well above the two-thirds threshold. Sen. Josh Becker, D-Menlo Park, didn’t vote on the bill.

The tax has been labeled a “job killer” by the California Chamber of Commerce because it will require small businesses to pay more to advertise online.

The tax, which will pay for hiring and retaining reporters, is supported by several labor groups including the California Federation of Teachers, unions representing reporters, and a number of struggling media outlets anxious for a government handout.

An analysis for the Senate said that while newspapers would be getting taxpayer funding, the government would not get involved in decisions about news content.

The left-leaning Chamber of Progress opposes the bill saying the money would only go to newspapers with full-time reporters, leaving out smaller independent and foreign-language publications that can’t afford full-time employees. Robert Singleton of the Chamber of Progress says the money will disproportionately go to right-wing media companies such as Sinclair Broadcast Group, owner of four TV stations in California, and media outlets owned by private equity groups. For instance, one winner will be MediaNews Group, which Singleton says has gutted newspapers like the Mercury News, leaving them like a “shell of their former selves.”

If approved, opponents warn that the bill will be challenged in court like similar legislation in Maryland.